Lovefilm eschewed a possible IPO option because Amazon (NSDQ: AMZN) gives it a global-scale parent with resources enough to land the rights necessary to profit from the coming online movie explosion, says one of the VCs who has exited in the deal (see earlier story).
“It’s a win-win all round,” Balderton partner Dharmash Mistry tells paidContent:UK. “This is a game for relatively deep pockets – you need to do deals with studios, which is an expensive business.”
Like Netflix (NSDQ: NFLX), Lovefilm’s nascent online movie subscription catalogue is only about a tenth as big as its core DVD roster, and it recently took £10 ($15.96) million in debt for the digital rights grab. The connected-TV opportunity could rocket both businesses, if they can secure A-list studio films and wrest more premium rights from subscription operators like Sky Movies.
News Corp.’s UK subscription movie channels currently have a lock on first-release Hollywood flicks – Lovefilm and others are trying to win concessions through an ongoing antitrust inquiry in to the situation.
Balderton (the former Benchmark Europe), Index Ventures, DFJ Esprit and Arts Alliance Media had each held a roughly equal stake in Lovefilm, with the rest of the 48 percent share held by founders of the constituent companies through which Lovefilm was formed as a patchwork over the years.
paidContent:UK understands the sale price was in the £200 ($319.39) million range touted in recent reports. Why no stock flotation?